CPS Technologies Corporation (CPSH): Business Model Canvas [Dec-2025 Updated]

You're digging into CPS Technologies Corporation (CPSH) to see if their advanced metal matrix composites are a solid investment, and honestly, mapping out their business model is the fastest way to cut through the noise. After years analyzing complex tech plays, I've distilled their strategy-from securing defense contracts with the U.S. Army to powering the electrification trend-into the nine essential blocks below. Here's the quick math: they just clocked $8.8 million in revenue for Q3 2025 and returned to a small profit of $0.2 million, showing real traction from their specialized intellectual property. This canvas shows exactly how they turn proprietary materials into dollars, so let's see the blueprint.

CPS Technologies Corporation (CPSH) - Canvas Business Model: Key Partnerships

You're looking at the core relationships that underpin CPS Technologies Corporation's operations as of late 2025, which are heavily weighted toward large, strategic, and government-backed contracts. These partnerships are driving the company's recent financial momentum, including record revenue in the first half of 2025.

The financial structure supporting this growth is also a key partnership element. CPS Technologies Corp. closed an underwritten public offering on October 8, 2025, raising gross proceeds of approximately $10.35 million before deducting underwriting discounts and commissions and offering expenses. Roth Capital Partners, LLC served as the sole book-running manager for this transaction, which involved the sale of 3,000,000 shares at $3.00 per share, plus the full exercise of the over-allotment option for an additional 450,000 shares.

Here's a quick look at the major contractual and financial relationships:

CPS Technologies Corporation's engagement with the U.S. defense sector has been particularly active in fiscal 2025, securing multiple federally funded projects. This work is separate from, but complements, the commercial business that saw Q1 2025 revenue of $7.5 million and Q2 2025 revenue of $8.1 million, even without the HybridTech Armor® business.

The specific defense and research contracts include:

• U.S. Army: Awarded a Phase I SBIR contract valued at $250,000 to optimize tungsten alloys to replicate depleted uranium for military munitions, with Texas A&M University as a subcontractor.
• U.S. Army DEVCOM: Secured a Phase II STTR contract worth $1.15 million to further develop a controlled fragmentation tungsten warhead, marking the Company's fifth new federally funded project of 2025.
• U.S. Navy/Marine Corps: Received a Phase I SBIR contract in July 2025, valued at $140,000 over six months (with a potential $100,000 extension), to reduce the weight of the Amphibious Combat Vehicle (ACV).
• U.S. Department of Energy (Office of Nuclear Energy): Awarded a Phase I SBIR contract to research high-performance impact limiters for transporting spent nuclear fuel and high-level radioactive waste, with the project scheduled to run until April 2026.

The completion of the HybridTech Armor® contract with Kinetic Protection for the U.S. Navy was a significant event, as its absence contributed to the Q4 2024 revenue of $5.9 million. Still, management noted productive discussions are ongoing between CPS, Kinetic Protection, and relevant members of the Department of Defense regarding future armor orders, supported by the fiscal 2026 defense spending priorities.

The $15.5 million semiconductor contract, announced in October 2025, is a key indicator of commercial partnership strength, representing a 16.5% year-over-year increase in business from that specific customer.

CPS Technologies Corporation (CPSH) - Canvas Business Model: Key Activities

The core of CPS Technologies Corporation's business centers on the physical creation and refinement of specialized materials and components, which requires significant operational execution and ongoing innovation investment.

Manufacturing high-performance metal matrix composite materials is the fundamental activity, translating directly into the top-line results. For the third quarter ended September 27, 2025, CPS Technologies Corporation reported revenue of $8.8 million, more than doubling the $4.2 million reported in the prior-year period. This performance marked the third consecutive quarter of record revenue. The last twelve months of revenue totaled $30.32 million, representing a 38.22% year-over-year increase. The gross margin achieved in Q3 2025 was 17.1 percent of revenue, a significant improvement from the gross loss of (12.3) percent in Q3 2024.

The activity of Research and development (R&D) of advanced material solutions is heavily supported by federal funding mechanisms. CPS Technologies Corporation secured multiple research awards throughout 2025, demonstrating an active pipeline of innovation. These activities are often structured as Phase I Small Business Innovation Research (SBIR) contracts or Phase II Small Business Technology Transfer (STTR) contracts.

Here is a breakdown of the significant, non-confidential research awards announced in 2025:

Production of power module components for electrification markets is a key commercial driver, evidenced by major contract awards. Following Q3 2025, CPS Technologies Corporation announced a follow-on contract valued at approximately $15.5 million with a major multinational semiconductor manufacturer. This contract, which began on October 1, 2025, is for advanced power module components over a 12-month period and represents a 16.5% year-over-year increase in business from that customer. These components support systems for high-speed rail, energy, and grid infrastructure.

The activity of Executing government-funded Small Business Innovation Research (SBIR) contracts is a recurring theme, with multiple awards in 2025 alone. The company secured its fourth SBIR contract of 2025 in July, and its sixth federally funded research award of 2025 in September. Furthermore, three new Phase I Army SBIR contracts were initiated during the first quarter of 2025.

Planning and executing the move to a new, larger production facility in 2026 is being financed through recent capital activities. On October 8, 2025, CPS Technologies Corporation closed on a public offering that brought in net proceeds of $9.5 million. These funds are designated for general corporate purposes, which explicitly include the expansion of production capabilities via the move to a larger facility.

Key financial performance metrics related to these activities in the first three quarters of 2025 include:

• Revenue for the first six months of 2025 was $15.6 million.
• Net income for the first six months of 2025 was $0.2 million, compared to a loss of $1.1 million a year ago.
• Q3 2025 operating profit reached $0.3 million, reversing the operating loss of $(1.5) million in Q3 2024.
• The company also announced receipt of its first commercial order for AlMaxTM materials in July 2025.

CPS Technologies Corporation (CPSH) - Canvas Business Model: Key Resources

You're looking at the core assets that let CPS Technologies Corporation actually build and sell its advanced materials. These aren't just ideas; they are tangible things and protected knowledge that drive the business.

Proprietary intellectual property (IP) and advanced materials technology form the bedrock of CPS Technologies Corporation's offering. This includes the specialized knowledge around metal matrix composites, such as the core AlSiC product, and newer materials like AlMax, for which the company secured global exclusive rights less than 18 months before mid-2025. The company also works with Fiber Reinforced Aluminum (FRA) materials. This IP is critical for applications in defense, energy, and high-performance electronics.

The physical manufacturing capability is centered in Norton, Massachusetts. The company is actively planning for growth here. Following a capital raise in October 2025, CPS Technologies announced plans to use the proceeds for capital expenditures, which specifically include the expansion of production capacity, potentially through a local move to a larger facility to meet growing customer demand. This shows a commitment to scaling up the physical footprint.

The operational capacity relies on specialized production equipment for metal matrix composites and hermetic packages. This equipment is necessary to produce components for demanding sectors like electric vehicles, 5G infrastructure, and Aerospace/Satellite applications, where CPS Technologies hermetic packages are used. The need for this equipment is underscored by the addition of a third production shift in late 2024 to boost output.

The company's intangible assets are protected through its IP portfolio. While the exact number of patents in ceramic material technologies isn't publicly specified as 23 in recent filings, the ongoing development and securing of new contracts, like the fourth Small Business Innovation Research (SBIR) contract in 2025, affirm the continuous investment in and protection of its material science expertise.

Financial strength supports these operations and future investments. Here's a quick look at the balance sheet components as of the end of the second quarter of 2025:

The tangible and intangible assets are being actively utilized, as evidenced by recent business activity:

• Secured a contract valued at approximately $15.5 million from a semiconductor manufacturer in October 2025.
• Achieved record quarterly revenue of $8.1 million in Q2 2025.
• Received its fourth SBIR contract of 2025, with one Phase I award valued at $140,000 plus an optional extension worth an additional $100,000.
• Secured the first commercial order for AlMax material earlier in Q2 2025.

CPS Technologies Corporation (CPSH) - Canvas Business Model: Value Propositions

High-performance thermal management solutions for power electronics are a core value driver, evidenced by a significant new commitment from a major customer.

CPS Technologies Corporation secured a follow-on contract valued at $15.5 million with a multinational semiconductor manufacturer to deliver advanced power module components over a 12-month period starting October 1, 2025. This specific engagement represents a 16.5% year-over-year increase in business from that customer.

Lightweight, durable ballistic protection for defense/aerospace applications is supported by government funding and material development.

The Company announced two recent government-funded research awards, including a Phase I Small Business Innovation Research (SBIR) contract from the U.S. Department of Energy, valued at approximately $125,000 through April 2026. Also, a Phase II, two-year, $1.15 million Small Business Technology Transfer (STTR) contract with the U.S. Army is underway to advance development of a controlled fragmentation tungsten warhead. Furthermore, a Phase I SBIR contract in Q2 2025 focused on reducing the weight of the Amphibious Combat Vehicle (ACV) for the U.S. Marine Corps.

Hermetic packages for sensitive Aerospace and Satellite applications contribute to the overall revenue growth seen across core product lines.

Custom engineered materials solving complex engineering challenges are reflected in the Company's overall financial acceleration.

Critical components enabling the transition to clean energy and electrification are part of the demand driving the business.

The overall financial performance in 2025 clearly demonstrates market acceptance of these value propositions, with record sales reported across the first three quarters.

Here's the quick math on the revenue trajectory through Q3 2025:

• Revenue for the last twelve months totaled $30.32 million, up 38.22% year-over-year.
• Q3 2025 revenue hit $8.8 million, more than doubling the $4.2 million from Q3 2024.
• Q2 2025 revenue was $8.1 million, a 62% increase from Q2 2024's $5.0 million.
• Q1 2025 revenue was $7.5 million, up from $5.9 million in Q1 2024.

The market for thermal management itself is estimated to be worth approximately USD 16,655.0 Million in 2025.

The tangible financial results from the first nine months of fiscal 2025 underscore the value delivered:

The improvement in profitability is clear; Q3 2025 saw an operating profit of $0.3 million compared to an operating loss of $(1.5) million in the prior-year period. Net income for Q3 2025 was $0.2 million, or $0.01 per diluted share, against a net loss of $(1.0) million, or $(0.07) per share, in Q3 2024.

What this estimate hides is that the Q3 2025 gross margin of 17.1% was an improvement over Q2 2025's 16.5% and Q1 2025's 16.4%, showing sequential margin expansion.

Finance: review the cash position post-offering and draft the impact of the $15.5 million contract on Q4 2025 revenue forecast by Monday.

CPS Technologies Corporation (CPSH) - Canvas Business Model: Customer Relationships

You're looking at how CPS Technologies Corporation keeps its key customers engaged, and honestly, it's a mix of deep partnership and steady component supply. The relationship strategy clearly splits between high-value, long-term strategic accounts and more volume-based component sales.

Dedicated account management for major, long-term defense and semiconductor clients

For the biggest players, especially in semiconductors, the relationship is clearly long-term and managed closely. Take the recent follow-on contract announced after Q3 2025; it's valued at approximately $15.5 million and covers advanced power module components over a 12-month period starting October 1, 2025. What's telling is that this specific order represents a 16.5% year-over-year increase in business from that single, longstanding multinational customer. That kind of growth suggests a dedicated team is working to integrate CPS Technologies Corporation solutions deeply into their next-generation systems, which will be supported by the company's planned move to a larger production facility enabled by a recent $9.5 million net proceeds capital raise.

Collaborative R&D with government agencies for new product development

The company actively cultivates relationships with government agencies, using externally funded research to drive future commercialization. As of late 2025, CPS Technologies Corporation secured six federally-funded research awards. These aren't just small grants; they are focused on mission-critical technology development, which locks in a consultative relationship with defense and energy sectors.

Here's a quick look at some of those 2025 R&D engagements:

These contracts, which include both SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) awards, show a commitment to solving tough engineering challenges for the DoD.

Transactional sales for standard power module components

Not every interaction is a multi-year R&D partnership. A significant portion of the business involves delivering core products, like the advanced power module components mentioned earlier, which are used across diverse industrial, energy, and mobility applications including high-speed rail and electric vehicles. While the $15.5 million contract is large, the underlying sales mechanism for these standardized components is more transactional, based on volume and recurring orders driven by strong market demand. The company's Q3 2025 revenue of $8.8 million, which more than doubled the prior year's $4.2 million, reflects this robust, recurring transaction volume.

High-touch, consultative approach for custom material engineering projects

For newer, specialized materials, the approach shifts back to high-touch consultation. This is evident with the commercialization of AlMax™, the Fiber Reinforced Aluminum (FRA) composite technology CPS Technologies Corporation exclusively licensed. The company secured its first commercial order for AlMax™ in 2025, though the value was described as 'modest in size'.

This initial sale suggests a consultative process is underway:

• Customer feedback has been highly encouraging.
• The material offers unique advantages like the density of aluminum with greater strength at high temperatures.
• The focus is on proving out performance for potential larger follow-on orders in defense, aerospace, and industrial markets.

This consultative path is about proving the value proposition of a new material before it scales to the transactional level of their established power modules.

Finance: draft 13-week cash view by Friday.

CPS Technologies Corporation (CPSH) - Canvas Business Model: Channels

You're looking at how CPS Technologies Corporation moves its advanced material solutions-like metal matrix composites (MMCs) and AlSiC products-to its end-users, which span defense, industrial, and clean energy sectors. The channels are a mix of direct engagement for large, complex projects and structured government pathways.

The primary routes for product delivery and revenue generation involve a direct sales approach to key industrial and defense clients, supported by direct distribution logistics from the Norton, MA facility. Furthermore, government funding and product sales flow through specific contracting offices.

Here are some concrete financial and statistical markers related to these channels as of late 2025:

The direct sales force targets major industrial users, evidenced by the recent $15.5 million contract with a global semiconductor manufacturer in October 2025. This suggests a significant portion of the revenue growth, which saw Q3 2025 revenue hit $8.80M, is driven by these large, direct customer relationships.

For government contracting offices, the channel is heavily weighted toward research and development contracts, which CPS Technologies Corporation uses to advance product offerings. You can see this activity clearly:

• Secured a Phase I SBIR contract from the U.S. Department of Energy (DOE) valued at approximately $125,000 in September 2025.
• Received a $250,000 Phase I SBIR contract from the U.S. Army in February 2025.
• Secured three Phase I SBIR contracts in early 2025, each valued at $250,000.
• Received its first commercial order for radiation shielding materials, valued at less than $100,000, expected to be fulfilled in 2025.

The direct distribution from the Norton, MA facility handles the fulfillment of these orders, whether they originate from the direct sales team or government contracts. The company's ability to scale production, as seen by the jump from Q1 2025 revenue of $7.5 million to Q3 2025 revenue of $8.80M, is directly tied to the efficiency of this physical channel.

Investor Relations (IR) is a distinct channel for capital access, not product sales, but it's crucial for funding capacity expansion. CPS Technologies Corporation completed a public offering in October 2025, raising gross proceeds of approximately $10.35 million by selling 3,450,000 shares at $3.00 each. They intend to use these net proceeds for working capital and capital expenditures, which may include relocating to a larger facility.

Finance: draft 13-week cash view by Friday.

CPS Technologies Corporation (CPSH) - Canvas Business Model: Customer Segments

The customer base for CPS Technologies Corporation is segmented across high-reliability, high-performance material and packaging needs, reflecting significant activity in electrification, defense, and advanced electronics as of late 2025.

The overall financial context for the business, based on the third quarter of fiscal year 2025 results, shows strong top-line performance:

You see this demand strength reflected in specific contract awards across the target segments.

Electrification and Transportation (EVs, high-speed rail, wind turbines, smart grid)

• CPS Technologies Corporation products are critical components for electric trains and subway cars, wind turbines, hybrid vehicles, electric vehicles, and the smart electric grid.
• Demand strength from the energy sector was specifically noted in the second quarter of fiscal 2025.

Aerospace and Defense contractors (U.S. Navy, Army)

This segment is supported by both product sales and specific government research funding:

• A Phase II, two-year, $1.15 million Small Business Technology Transfer (STTR) contract is active with the U.S. Army for warhead development.
• A new SBIR contract was secured to reduce the weight of the Amphibious Combat Vehicle for the U.S. Marine Corps.
• Three new Phase I Army SBIR contracts were initiated in the first quarter of 2025.
• CPS hermetic packages are utilized in many Aerospace and Satellite applications.
• The company's armor products offer exceptional ballistic protection and environmental durability at very light weight.

Global Semiconductor Manufacturers for power module components

This represents a major, confirmed revenue stream for CPS Technologies Corporation:

The company announced a follow-on contract with a major multinational semiconductor manufacturer valued at $15.5 million, set to deliver advanced power module components over a 12-month period beginning October 1, 2025. This specific business from that customer is a 16.5% year-over-year increase.

Communications infrastructure (5G) providers

The company's products and intellectual property address critical needs in 5G infrastructure.

Industrial and Nuclear Energy sectors for new radiation shielding products

The general industrial end markets are served by custom Metal Matrix Composite (MMC) components. Furthermore, a Phase I SBIR contract from the U.S. Department of Energy, valued at approximately $125,000 through April 2026, is underway.

The company is executing multiple federally funded research contracts, including three phase 2 SBIR programs as of late 2025.

Finance: draft 13-week cash view by Friday.

CPS Technologies Corporation (CPSH) - Canvas Business Model: Cost Structure

You're looking at the cost side of CPS Technologies Corporation's operations as of late 2025, based on their second quarter results. Honestly, the cost structure is heavily influenced by production volume and material costs, which is typical for a specialty manufacturer.

Manufacturing Costs and Cost of Sales

While specific line items for raw materials and production labor aren't broken out in the latest reports, we can look at the resulting Cost of Goods Sold (COGS) derived from the revenue and gross profit figures for the second quarter of fiscal 2025. The company reported record revenue of $8.1 million for Q2 2025. The gross profit for that same period was $1.3 million. This implies that the total cost associated with producing those goods, which includes raw materials and production labor, was approximately $6.8 million ($8.1 million revenue minus $1.3 million gross profit).

The improvement in gross margin to 16.5 percent from a gross loss in the prior-year period suggests better absorption of these fixed and variable manufacturing costs due to higher production rates.

Inventory Investment

You noted the inventory investment, and the numbers confirm that. As of June 28, 2025, inventories rose to $5.2 million. This compares to $4.3 million at the start of the fiscal year. This increase in inventory is in anticipation of meeting what management expects to be continued strong demand in the second half of the year.

Operating Expenses

The overall cost control is reflected in the operating results. The company posted an operating profit of $0.1 million for Q2 2025, a significant swing from the operating loss of $(1.3) million in the prior-year period. The specific Selling, General, and Administrative (SG&A) expense figure of $1.2 million for Q2 2025 was not explicitly confirmed in the latest filings, but the resulting operating profit shows the relationship between total operating expenses and revenue.

The key cost drivers impacting the bottom line, besides COGS, are the overhead costs that fall under operating expenses. Here's a quick look at the key Q2 2025 financial metrics that frame the cost structure:

Research and Development (R&D) and Future Capital Costs

R&D spending is evidenced by strategic wins, not necessarily a direct dollar cost in the summary financials. The company secured its fourth Small Business Innovation Research (SBIR) contract of the year, focusing on reducing the weight of the Amphibious Combat Vehicle for the U.S. Marine Corps. This validates the investment in developing next-generation solutions, like AlMax material commercialization. Specific R&D expenditure amounts aren't detailed in the summary results, so we look at contract wins as validation of that investment.

Regarding future costs, management has indicated plans for gross margins to expand and overall profitability to increase. The planned 2026 facility expansion capital expenditures are a future cost consideration, but the specific dollar amount for that project wasn't detailed in the Q2 2025 results.

The cost structure is clearly sensitive to production efficiency, which is why management is focused on operational upgrades.

• Inventory balance as of June 28, 2025: $5.2 million.
• Increase in inventory from fiscal year start: $0.9 million ($5.2M minus $4.3M).
• Operating Profit margin: Approximately 1.2 percent ($0.1M operating profit on $8.1M revenue).
• Fourth SBIR contract secured in 2025.

Finance: draft 13-week cash view by Friday.

CPS Technologies Corporation (CPSH) - Canvas Business Model: Revenue Streams

You're looking at the revenue side of CPS Technologies Corporation's business model as of late 2025. It's clear the company is seeing significant traction, moving past prior revenue gaps with strong product demand and government engagement. Here's the quick math on where the money is coming from.

The core product sales are driving the current top line. Specifically, product sales of power module components were a major factor, contributing to the Q3 2025 revenue of $8.8 million. This was part of a larger trend, as CPS Technologies announced a substantial $15.5 million follow-on contract for advanced power module components, set to deliver over a 12-month period starting October 1, 2025. This single contract represents a 16.5 percent year-over-year increase in business from that specific customer.

Beyond the core components, CPS Technologies generates revenue from specialized areas:

• Sales of hermetic packages and armor products to defense and aerospace sectors.
• The company remains engaged in discussions regarding potential armor contracts, following the completion of a prior U.S. Navy armor contract.
• Business opportunities are also highlighted in aerospace and industrial applications.

Government-funded research and development contracts are another key stream, often originating from Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. As of the Q3 2025 reporting period, CPS Technologies had secured several such awards:

• A Phase I SBIR contract from the U.S. Department of Energy, valued at approximately $125,000 through April 2026.
• A Phase II, two-year STTR contract with the U.S. Army, valued at $1.15 million, for work on a controlled fragmentation tungsten warhead.
• The company secured three Phase I SBIR contracts in early 2025, each valued at $250,000.
• They also announced a fourth SBIR contract in Q2 2025, focused on reducing the weight of the Amphibious Combat Vehicle for the U.S. Marine Corps.

To give you a clearer picture of the year-to-date performance leading up to that Q3 result, here are the key financial metrics:

The financial results for the third quarter show a strong operational turnaround. Net income for Q3 2025 was $0.2 million (or $208,000), marking a definite return to profitability compared to a net loss of approximately $1 million in Q3 2024. This performance contributed to the total revenue for the first nine months of 2025 reaching approximately $24.4 million, which was a 61 percent increase from the same period in 2024.

The revenue streams are clearly diversifying and scaling up. Finance: draft 13-week cash view by Friday.